What to choose for investment: gold or real estate?
Once you have managed to earn a certain amount of money, the next task is to maintain its purchasing power.
On average, over ten years, your capital depreciates by half, that is, you can buy much fewer goods and services with your accumulated money.
In order to avoid losing the accumulated money, you need to invest it in those assets that show stable growth and increase their price faster than inflation .
The most popular investments among our citizens are investments in real estate and gold bars.
But which asset will be more profitable in the long run and will bring less worries to its investor?
Profitability of real estate investments
Real estate, in 2019 I bought an apartment in Poland measuring 50 square meters and costing 100,000 US dollars. Because I thought that investing in real estate abroad would be more reliable than in Ukraine.
The exchange rate of the Polish zloty is quite unstable, so price analysis will be carried out in US dollars.
At the moment, this apartment costs about $140,000, that is, the price has increased by about 40% in five years.
For a number of reasons, I did not rent out this property, so utility costs should also be deducted from the profit received. Over 5 years they amounted to $5,000, and about another $1,000 was spent on paying taxes on real estate.
That is, the net profit on sale today will be 140,000-100,000-5,000-1,000 = 34,000 dollars, or 34% of the money invested. If the apartment were rented out, then taking into account all expenses and in the best scenario, another $18,000 would be added to the amount of profit, then the profit would be $52,000 or 52% over 5 years.
Profitability of investment in gold
The cost of 999.9 gold five years ago was $1,300 per troy ounce or $41.80 per gram
Over the past time, the price of the precious metal has skyrocketed, and now you can sell gold, taking into account the commission, for 2250 per troy ounce .
As a result, the profit over the past 5 years amounted to $950 per ounce or 73% . Moreover, there were no additional costs for servicing the investment.
What is more profitable: gold or real estate?
The conclusion here is obvious: it is much more profitable to invest in the purchase of gold bars than to buy real estate.
Over the analyzed 5 years, investments in real estate brought 34%, and investments in gold increased the initial capital by 73%. Yes, taking into account the profit from rental real estate, the ratio is 52% and 73%, still not in favor of real estate.
After this experience, I am more inclined to invest in gold, since in addition to higher profits, this option is also less troublesome.
Gold bars do not require constant monitoring like an apartment and, if necessary, you can always sell part of the purchased bars, while the property is sold in its entirety.
In addition, today it is not at all necessary to buy physical gold; it is more rational to buy gold on the exchange:
- Instructions for buying gold on the exchange - https://time-forex.com/vopros/pokupka-zolota-na-birzhe
- Brokers for trading gold - https://time-forex.com/vsebrokery/brokery-zoloto-serebro